China's Silk Road Fund buys stake in Russian LNG project

BEIJING | Dec 18: Cash-rich China's Silk Road Fund today said it will buy 9.9 per cent stake in an LNG project of Russia's second-biggest gas producer Novatek and also extend a 15-year loan of $790 million to finance the struggling venture.

The Silk Road Fund, a $40 billion medium to long-term investment fund, said it entered into a set of binding agreements with Novatek here yesterday in presence of Chinese Premier Li Keqiang and Russian Prime Minister Dmitry Medvedev.

The Fund will buy 9.9 per cent stake in Novatek's Yamal liquefied natural gas project and provide a 15-year loan of around 730 million euros ($790 million) to finance the project.

State-run Xinhua news agency reported that the deal will not move ahead until an intergovernmental agreement comes into force.

Located on the Yamal Peninsula, the project is the world's largest natural gas development, liquefaction, transportation and sale project, with a designed annual output of 28 billion cubic metres.

The $27-billion project is struggling to raise funds due to international sanctions slapped against Russia over the Ukrainian crisis.

The Silk Road Fund was set up in December 2014 to promote investment and financing cooperation between China and other countries, serving the China-proposed "Belt and Road" initiative, which encompasses the Silk Road Economic Belt and the 21st Century Maritime Silk Road.